Investing in property, if done correctly, can allow you to build wealth and meet your financial goals head on. In fact, many Australians are currently using property investment to get them ahead financially, while others are considering which investment options are best for them and their circumstances.
Recent data from Roy Morgan suggests that investment property home loans have increased by more than 30 percent since the year 2000. In comparison, owner-occupied home loans grew by just 4 percent over the same duration.
If you’re thinking about property investment, then there are different ways that you can earn a return. Let’s look at the most common ways you can gain a return on a property.
1. Capital Gains – This occurs when you buy an investment property and then hold on to it for a number of years. If home prices have risen over the time of your ownership then you’ll be able to sell the home for a higher price than you paid. The difference between your buying and selling price is the amount you have gained financially by investing.
2. Rental Yield – Renting your investment property to tenants will also allow you to generate a return on your investment. Ideally you want the value of the rent you collect weekly to cover the costs of your investment property, such as mortgage repayments, maintenance and insurance fees. In some cases, you may even make a profit from the rent you collect and you’ll then be able to put extra money in the bank.
Property investment not only allows you to generate wealth, but it allows offers you financial security for the future. Many people build a property portfolio so that they can obtain financial freedom later in life and generate an income for their retirement.
Gradually you’ll increase your property portfolio and your assets, as well as your wealth. Overall, property investment gives you flexibility and control over your assets. However, you need to bear in mind that property investment is a long-term commitment and that your wealth is tied-up in an asset or assets that at times can be difficult to liquefy if you need money fast.
Do you want to know more about investment property? Then contact eChoice and find the right home loan for YOU today.